Cost-cutting efforts to yield results
TOKYO -- Ricoh expects operating profit to rise more than fivefold to over 50 billion yen ($451 million) in the fiscal year starting in April as restructuring costs pass and revamped operations improve margins.
The Tokyo-based office equipment maker will book 39.5 billion yen in nonrecurring costs associated with restructuring for the year ending in March, contributing to an expected 70% decline in operating profit to 10 billion yen. The company is slimming down operations by cutting jobs at a struggling North American sales subsidiary, among other reforms, leading to such one-time expenses as severance payouts.
"We are slicing off the fat and keeping as many people as appropriate for operations," explained Corporate Executive Vice President Akira Oyama, who provided the profit estimate for fiscal 2018.
The group has cut about 4,000 jobs since late March, leaving just over 100,000 employees as of September's end. By reducing fixed costs, Ricoh expects a 37 billion yen boost to profit in fiscal 2018 compared with fiscal 2016.
Ricoh is also reviewing its administrative structure and production methods to improve profitability. In January, the company moved its headquarters from a rental office in Tokyo's upscale Ginza district to its own building in Ota Ward. It also plans to reorganize production facilities in Saitama Prefecture and the U.S.
"We will consider dividing up production with other companies rather than making everything ourselves," Oyama said.
The market also holds high expectations for improved earnings. The QUICK Consensus survey of analyst forecasts pegged Ricoh's fiscal 2018 operating profit at 79 billion yen as of Wednesday, making the company's own projections look conservative.
Ricoh's midterm plan announced last year targets an operating profit of more than 100 billion yen in fiscal 2019.
(Nikkei)